LONDON — After years of financial turmoil, court battles and humbling setbacks, Liverpool has risen to the top of the Premier League.

The Reds are ahead of Arsenal on goal difference heading into the traditional Boxing Day games on Thursday.

“It is a nostalgic time and people always want to know where the team is at around Christmas Day,” Liverpool manager Brendan Rodgers said Tuesday. “It is brilliant for supporters. I am not going to deny them a dream.”

The last four Christmas Day leaders went on to lift the trophy in May. The last not to was Liverpool in the 2008-09 season under Rafa Benitez.

So much has changed since.

“It has been a hard period in this club for four or five years and (being in first place) was probably a distant thought,” Rodgers said. “They have to enjoy it.”

Staring into the financial abyss in 2010, bankruptcy was looming until the owners were ousted in court and new American investors, headed by John Henry, rescued the club.

But the Reds still seemed to be a team in decline. A return to the lucrative Champions League by finishing in the top four seemed unlikely, let alone a 19th English title — and the first since 1990.

Even after former great Kenny Dalglish was replaced as manager by Brendan Rodgers in 2012, Henry’s heavy investment in the squad didn’t seem to be paying off.

Rodgers’ first season ended in May with Liverpool 28 points behind champion Manchester United and 12 points out of fourth place.

Since then, Luis Suarez was denied a move to Arsenal. He has scored 19 goals in 12 matches since missing the opening five games while completing a ban for biting a player.

The Uruguay striker has been devastating up front in December — with no new disciplinary problems. Four goals against Norwich were followed by doubles against West Ham, Tottenham and Cardiff as the team scored 17 while rattling off four wins.

Only 2012 champion Manchester City can match such lethalness, with a league-leading 51 goals.

On Thursday, Liverpool visits Man City, which is in third place and has won three of its last four league games by scoring 14 goals. The game at the Etihad Stadium should show how ready Liverpool is to retain its place among the elite.

Players once dismissed as Anfield misfits have come to the fore, and expensive flops, including Andy Carroll, are no longer around.

Captain Steven Gerrard being sidelined once could have derailed the team. Now Jordan Henderson, who seemed to be burdened by a huge price tag after arriving from Sunderland in 2011, is providing the dynamism and assured touches in midfield.

Raheem Sterling is another young English player establishing himself as a regular starter, with the winger scoring three times in the last four games.

“He has shown he is back to that level where he is really aggressive and direct,” Rodgers said.

Ownership attributes the team’s re-emergence to Rodgers, who became an easy target for derision during the club’s potentially misguided foray into reality television last year but whose management skills are being lauded again.

“He has great communication skills,” Liverpool chairman Tom Werner said. “He’s very articulate in his strategy and the players have responded to him.”

There are, however, 19 games to go in the most open title race in the Premier League since its inception in 1992.

Even though Arsenal and Chelsea proved to a 0-0 draw Monday, there is little to separate them in the standings from Liverpool.

Liverpool and Arsenal are the only teams in the top five with the same managers as last season, with Manuel Pellegrini now at City, Jose Mourinho back at Chelsea and Roberto Martinez in charge at neighbor Everton.

“It is a transition period for a lot of teams so maybe we have the extra year on a few and the way things are going at the moment ... we can be dangerous,” Liverpool defender Glen Johnson said.

As for the reigning champions, Manchester United is in eighth place nearly a half season into the post-Alex Ferguson era. But the Red Devils are only eight points behind Liverpool, and the standings could look very different at the start of 2014 with nine points up for grabs over the next week or so.